Business Report of 26 October quotes almost identical words of wisdom from two sources. Nobel prizewinning economist James Heckman, talking of slow structural reform in Europe (but it applies equally to SA), says “the globalised economy punishes every country that does not adapt”. Reserve Bank governor Tito Mboweni says “globalisation mercilessly exposes the shortcomings in national economic policies in countries that do not apply the universal ‘laws’ for prudent macroeconomic management”.
They are obviously right. There is no one way to get an economy going, but there are millions of ways to prevent it. Who can know which factor dissuade the “swing” investor (local or foreign) from saving and investing in SA? What ought to be hammered into every player’s noddle is that everything matters. Any and every foolish decision and statement can derail growth yet again.
Just look at a few items from the same day’s papers. President Mbeki says the inflation target isn’t sacred – so much for Reserve Bank independence and stable money! Experts warn SA about repeating UK’s mistakes with the coming Financial Advisers Bill, with the same negative repercussions for consumers. Transnet and Telkom make expensive agreements with unions to cushion essential and long-overdue retrenchments and cripple privatisation in advance. An economist suggests SA may have missed the privatisation boat as Telkom’s sale value shrinks while we wait forever for competitive cheap calls and internet access. Treasury and Revenue fiddle about with controversial multinational tax incentives instead of just reducing (and then reducing again) SA taxes and state spending across the board. Influential economist advises government to ignore Sacob’s strong protest and press on with insane new first-world capital gains and residence-based taxes instead of simplifying, reducing and actually collecting existing taxes. Oilseed millers urge the Board on Tariffs and Trade to protect them from cheap imports with a tariff that will protect them and hit consumers. Taxi drivers protest again about government plans for ‘recapitalisation’, alias more regulation and interference if not outright nationalisation.
Any one of these would depress a potential investor, and tomorrow there will be another slew of equally bad news. It’s high time for everyone to get behind a vigorous and urgent push for privatisation and deregulation, less tax and less government. There are far too many public and private individuals out there promoting bad old policies and preventing SA lift-off. We have a lot of catch-up to do, so let’s get started. Not sideways and backwards as usual, not in supposedly African and perversely anti-market ways, but consistently forward towards best economic practice.
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